Library Project Fundraisers To Pay Themselves $1 Million Through 2027
Photo: https://www.joneslibrary.org/
Finance Committee Recommends Borrowing Another $10 Million for Library Expansion
The Finance Committee met on November 28 to decide whether to recommend authorizing an additional $9.8 million in borrowing for the Jones Library renovation-expansion project. Estimated project costs have risen to $46.1 million, exceeding the $36.3 million that the Town Council appropriated in April 2021.
Central to the discussion was a Revised Cash Flow analysis assembled by Jones Library representatives and town officials in a hastily called meeting the day before. The document sketches out a schedule for town debt service payments and library Capital Campaign reimbursements through June 30, 2030.
The new schedule shows Amherst issuing a 20-year General Obligation Bond for 20 years at an interest rate of 4.25%. Interest payments coming from the town’s tax levy are expected to total $7.94 million.
In addition, the town will issue short-term Bond Anticipation Notes (BANs) for $14.2 million over a period of 2 ½ years to cover the library’s share until committed funds can be raised. If BANs can be issued at a rate of 4%, the town is expected to pay $764,070 in interest.
It also emerged that the Jones Library Capital Campaign (JLCC) foresees paying $1.05 million in fundraising expenses. Expenses totaled $297,293 as of November 1, with 89% being personnel expenses. JLCC professional fundraisers earned $20,324 in September and $17,539 in October. If the rate of personnel expenses continues, the JLCC professional fundraisers, led by Kent Faerber, Matt Blumenfeld, Claudia Canale-Parola and Ginny Hamilton, stand to earn more than $934,000 for their campaign work. The JLCC did not respond to a Massachusetts Public Record Request by the Amherst Indy for a detailed accounting of personnel expenses.
Town Council President Lynn Griesemer corrected a misconception about who is responsible for fundraising expenses that stemmed from ambiguous wording in the Town-Library Memorandum of Agreement (MOA). The JLCC and not the town will cover all campaign expenses, she said. This means that the JLCC must raise $1.05 million in addition to the $14.8 million it is committed to raising to cover its share of library project costs.
Griesemer, Steinberg and Bockelman Champion Additional Borrowing
The Finance Committee discussion shaped into Griesemer, Finance Committee Chair Andy Steinberg and Town Manager Paul Bockelman urging approval of additional borrowing while Town Councilors Cathy Schoen and Ellisha Walker attempted to drill down into how additional library borrowing would impact other budget priorities, and risks to the town if the JLCC fails to meet its fundraising target.
JLCC Co-chair Kent Faerber described assumptions that the library can raise a total of $31.64 million by the end of FY30 as “plausible” but “there’s no way to be certain.” Uncertainties include converting $3.25 million in pledges into receipts, raising an additional $4.98 million in grants and gifts, and receiving $1.8 million in Massachusetts Historic Rehabilitation Tax Credits (MHRTC). Only two library projects have received such credits in the history of the MHRTC program, and these have involved minimal disruption to historic features.
The MOA requires the library to remit its full share of the project cost to the town within one year after a certificate of occupancy for the renovated library is issued, or by approximately June 2027. Library trustees have indicated that they can take out a loan to fill a fundraising shortfall at that time, but viability and terms of such a loan have not been fleshed out.
Councilor Schoen was particularly concerned with the lack of consideration of how additional library borrowing might delay or reduce capital initiatives such as a new DPW building, new central fire station, and future road maintenance.
“All I want to say is it [additional borrowing] leaves less for everything else,” Schoen said. She questioned what the sources of money for other capital needs will be.
Cathy Schoen, Town Councilor (District 1) and Finance Committee member
She produced an analysis based on the FY24 Capital Improvement Program that showed a marked reduction in cash available for capital needs, especially in fiscal years 2025-2026, when additional library borrowing will consume $223,000 and $593,000 respectively. Schoen noted that the capital plan for these years is already running a small deficit, and that road repair money from the General Fund is being reduced from $1.35 million in FY24 to $600,000 in FY25 and beyond. The Town also plans other capital expenses such as new vehicle purchases, town-owned building maintenance and sustainability improvements, and plans call for the new DPW facility project to begin in this timeframe.
“All I want to say is it [additional borrowing] leaves less for everything else,” Schoen said. She questioned what the sources of money for other capital needs will be.
Griesemer and Steinberg suggested that money might be pulled from the town’s capital stabilization fund, currently designated for the new fire station, and which Steinberg and Griesemer had argued in April shouldn’t be touched when Councilor Walker had proposed using $5 million to reduce the impact of the Fort River School tax increase scheduled to kick in in 2025.
The suggestion prompted a passionate protest during public comment from resident Maria Kopicki. “I want to comment specifically about what was finally said out loud at this meeting which is the willingness of the town manager and some town councilors to dip in into the capital stabilization fund. When we were talking about [relieving taxes for] the school project you would have thought that we were literally trying to take bricks from the fire department the way that you’ve said we absolutely must not touch this Capital Stabilization fund.”
Public comment by Toni Cunningham echoed Schoen’s concerns. “We still haven’t seen the impact of the library borrowing on the five-year capital plan and what projects and purchases would be deferred,” she observed.
Town Councilor Pam Rooney posed additional questions during public comment. She wondered if authorizing a full $49.1 million in borrowing for the library project might, when combined with other borrowing. cause the town to approach its legal debt authorization limit. Bockelman produced a two-page list of authorized town debts but explained that water and sewer-related debt paid for by user fees does not count toward the debt limit, nor does the Fort River School debt since it is entirely covered by tax increases beyond the Proposition 2 ½ limit.
Recommendation Comes to a Vote
Questions about the impact of additional library borrowing on the DPW and fire station projects were not addressed, nor was there any mention of the November 20 Public Forum on the library borrowing proposal where 14 members of the public spoke in opposition to the borrowing and 6 spoke in favor.
Despite much newly submitted financial information and unanswered questions, Chair Steinberg moved that the Finance Committee recommend the Town Council approve the town manager’s request for a supplemental appropriation and bond authorization for the Jones Library.
During a May Finance Committee review of the library budget, Steinberg had recused himself from voting on a recommendation, explaining that his wife is a part-time employee of the library. However, for the supplemental borrowing vote Steinberg asserted that “based on state ethics commission advice and my own study of the state ethics rules, there is no conflict in my capacity as a municipal employee.”
Steinberg joined Griesemer and councilor Ana Devlin-Gauthier in voting to recommend the borrowing. Walker voted nay and Schoen abstained. The three non-voting resident members of the Finance Committee, Bob Hegner, Matt Holloway and Bernie Kubiak supported recommending.
The supplemental borrowing recommendation will come for final approval to the town council on Monday, December 4 at 6:30pm. Members of the public may attend in person at the Town Room or over Zoom.
Thanks again for your excellent reporting. Perhaps you can help clear up why my eyebrows are raised. The increased borrowing proponents are saying that the increased borrowing won’t happen if the authorization is allowed: “There is no intent or expectation to borrow $46.1 million, just as there was none to borrow $36.3 million when project costs were lower” (Ginny Hamilton in The Amherst Current) .but if it did happen, it won’t end up costing the town anything because “The guarantee that the higher project cost won’t fall to the Town comes from the Library Trustees. The Trustees & the Town Manager have MOAs to this effect agreeing that any costs beyond the MBLC and Town commitments are the responsibility of the Trustees.” (Ginny Hamilton, in the Amherst Current). Now there is suggestion that we use stabilization money to help out the trustees who are on the hook to raise the money, not the taxpayers who the same people didn’t want to help out when it came to the school project. And that money that the Trustees are on the hook for will have to be raised by professional fund raisers, Ginny Hamilton being one of them, thereby guaranteeing them a longer running job..
Have I got this right? Was there a logical explanation for the 180 turn on the use of stabilization funds.?
Gerry – Ginny Hamilton is correct in saying that the $36.3 or potentially $46.1 million borrowing authorizations represent a cap on borrowing and are not necessarily the amount that will be borrowed. That amount will depend on how much money is needed when, what town resources are available at the time, and how much the library has raised and handed over.
But she is flat out wrong that the town is only on the hook for $15.8 million, and borrowing another $9.8 million will cost the town nothing. Just last Tuesday an updated cash flow analysis was released that shows the town paying an additional $7.94 million in interest payments on the $15.8 million bond, and $764,070 in interest on the short-term notes needed to cover the expected JLCC shortfall.
The guarantee from the library trustees to plug the funding gap is only as good as the assets they have available to them, and it is hard to see how their $8 million endowment, of which 4-5% is needed every year for operating costs, is going to cover it. If they can’t fulfill their guarantee, the liability falls to the town.
Only Lynn Griesemer and Andy Steinberg can answer why the about face on tapping into capital stabilization, but the appearance is that they consider completing the most expensive library renovation in Massachusetts more important than lowering the property tax burden on residents or keeping on schedule for building a South Amherst fire station which has been the stated intent of the capital stabilization fund.
The fact that in April three members of the Library Capital Campaign publicly opposed using funds from capital stabilization to reduce the school tax bite indicates that repurposing it for the library project may have been the plan all along.
In today’s Times, I read an article about the new term “delulu,” popular with the young and optimistic. It apparently means “the process of making the seemingly impossible possible — or at least of coming to believe that they can.”
Perhaps this is the thought mode shared by those who think so positively about the library project’s ability to accumulate all necessary funds by the time they are needed. I, having too many decades under my belt, know that reality has a way of deflating bubbles of positivity, and if one’s Plan B is possessed of an equal amount of magical thinking, well, things will not go well.
I would pose the following questions about the trustees’ plan to deal with fundraising shortfalls:
1. If the trustees are forced to take out a loan to pay for any fundraising shortfall, where will the money to repay this loan and the resulting interest come from?
2. If the fundraisers currently responsible for bringing in this money — and promising that it can be done — do not meet their goals, will they be retained to continue doing this work, and where will the funds to pay them come from?
3. How will taking out a loan affect the library’s operating budget, which will presumably increase due to greater staffing and other needs? Will the town be asked to provide more money?
4. The current director has already indicated that, due to reductions in the furnishings budget to accommodate increased costs, she will ask the Joint Capital Planning Committee for additional funds if they are needed. What else will be cut, and what else will taxpayers be asked to fund?
The best laid schemes o’ mice an’ men
Gang aft a-gley.
[The best-laid plans of mice and men often go awry.]
— Robert Burns, 1785